Risk Management is the identification, analysis, and evaluation of "risk" that affects a business or an organization. The Risk Management process includes avoiding, controlling, financing or insuring exposures to financial uncertainty, legal liabilities, management errors, accidents, and natural disasters.
Once the reasons for a risk management plan are established, the next steps include identification of risks, assessment of those risks, design of a risk management plan.
In the Risk Management plan, several methodologies can be used such as avoiding risk, reducing risk, transferring risk using a variety of methods (such as insurance), or retaining risk and establishing financing to budget for retention.
Regardless of industry, it's imperative businesses and organizations develop a risk management plan.
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When establishing Risk Control Strategies, not all methodologies are needed and/or might not be affordable. When contemplating a Risk Management Plan, several factors have to be considered such as cost of the plan, applicability, practicality and how it would impact the business or organization, it's employees, members, and management.
Once a plan has been implemented, periodic evaluation is important to measure the effectiveness of the plan, which in turn might require needed changes or implementation of other methods to address issues that have impacted or might affect the business or organization.
While there isn't a perfect plan for any business or organization, it is imperative for management, leadership or ownership to best protect the employees, members, volunteers, or staff of the business or organization as well as the physical and other assets of the business or organization.
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